On April 10, 2014, Parkway Properties Inc. (PKY - Snapshot Report), an Orlando, FL-based real estate investment trust (REIT), announced the acquisition of Courvoisier Centre, a Class A office complex located in Miami, FL.
Parkway paid $145.8 million or $422 per square foot to the acquiree located in the Brickell submarket of Miami. With this takeover, Parkway is expected to strengthen its foothold in the high-growth Miami market. The acquisition will also likely complement Parkway’s Lincoln Place asset in Miami Beach.
This purchase of a 346,000 square-foot, two-building office complex, was financed through available cash and proceeds accrued from borrowings under Parkway’s new seven-year, unsecured term loan. Notably, just two days before the announcement, Parkway borrowed the full amount of its $100 million unsecured seven-year term loan.
Parkway has been eyeing properties in Miami for quite some time. At present, the population growth in Miami is nearly double than that of the U.S. Additionally, since the last three years, job growth has lowered the unemployment rate in Miami.
Moreover, foreign investment and cultural diversity have given an impetus to growth and urbanization in this area. The demand for multifamily building permits has also gone up in the Miami area in recent times. All these have prompted Parkway to be on the lookout for property acquisition in Miami.
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As a matter of fact, the Courvoisier Centre is a top-class asset in the urban locale of Brickell Key. The building offers water views from almost all leasable office space. Moreover, it has the second highest parking ratio in the Brickell submarket. All these factors will make the acquisition accretive to Parkway.
Parkway’s latest move is in line with its strategy of acquiring best-in-class assets within the strongest submarkets across the Sunbelt. The Courvoisier Centre property is expected to generate an initial full-year cash net operating income yield of 4.5%.
Currently, Parkway carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the same sector include Sotherly Hotels Inc. (SOHO - Snapshot Report), W. P. Carey Inc. (WPC - Snapshot Report) and Alexandria Real Estate Equities, Inc. (ARE - Snapshot Report). While Sotherly Hotels and W. P. Carey sport a Zacks Rank #1 (Strong Buy), Alexandria Real Estate Equities holds a Zacks Rank #2 (Buy).